Virtual Wallet Functionality

Digital wallets are marvellous creatures. Most people first think of the Apple and Google Wallets. And they point to an elegant UI with QR codes, payments and loyalty. Maybe even cryptocurrencies. But digital wallets are really just *trusted stores of verifiable data*. They can run on any trusted device, like your mobile or laptop, or even in the cloud. A private and secure environment that can cryptographically ‘watermark’ the data it holds. Ensuring that only the approved person can operate the wallet for important transactions. These digital wallet ‘watermarks’ matter. They mean that when data is shared, other people and businesses can *instantly verify it*. But what started as a way to control payments, can now handle any kind of data, including your digital ID. Today my digital wallet can store a driver’s license, a boarding pass or a loyalty card. But soon it will also hold your employee badge and proof of insurance. Or a loan statement and a login credential. With this broader view of wallet data, you can see how valuable digital wallets will become. Enabling trusted data portability in ways that have never been possible before. Digital Wallets mean we can prove, instantly: * Where a piece of data comes from * Who it was given to * If it’s been tampered with * It’s been revoked And, using clever maths and cryptography, we can share FACTS about the data, rather than the DATA ITSELF: * Are you a verified VIP (yes or no) - without sharing complex account history * Are you over 21 (yes or no) - without sharing age or DoB * Are you a resident of this country (yes or no) - without sharing address * Are you entitled to get an employee discount at the hotel (yes or no) - without sharing which company, role or personal HR info Look around and you’ll see loads of brands and governments jumping on digital wallets. A way to enable new citizen and customer experiences. And so they are marvellous little creatures. Helping others trust my data. If you want to know more about the future of personal data and customer engagement, check out the free weekly Customer Futures newsletter. Link below #digitalwallets #customerfutures #empowermenttech

𝐃𝐢𝐠𝐢𝐭𝐚𝐥 𝐖𝐚𝐥𝐥𝐞𝐭 — how do they work & where?👇 —— 𝐖𝐡𝐚𝐭 𝐢𝐬 𝐚 𝐃𝐢𝐠𝐢𝐭𝐚𝐥 𝐖𝐚𝐥𝐥𝐞𝐭: A digital wallet, also known as an electronic or e-wallet, is any application that enables individuals and businesses to make transactions over computer networks using multiple payment options — credit and debit cards, preloaded funds, cryptocurrencies, BNPL, etc. To ensure safety, e-wallets apply several layers of protection, such as data encryption, multi-factor authentication, and tokenization (the app replaces real payment details with a unique token) —— Basically, there are 3 distinct groups of B2C wallet apps: 1️⃣ 𝗣𝗮𝘀𝘀-𝘁𝗵𝗿𝗼𝘂𝗴𝗵 𝘄𝗮𝗹𝗹𝗲𝘁𝘀 — commonly designed as mobile-first, keep tokens that link to your credit and debit cards instead of storing sensitive data or money directly. They don’t take part in moving funds. Once a transaction is initiated, such apps just pass encrypted information to a merchant — hence, the name. In the course of further payment processing, the token travels to a payment network to be decrypted and checked against the actual card or account information in the issuing bank. After verification, the payment gets approved and sent to a merchant’s acquiring bank Known for high security, pass-through wallets act essentially as extensions of credit and debit cards, so they are more widespread in regions with high card adoption, such as Europe and North America i.e. — Apple Pay, Samsung Electronics Wallet, Chase Mobile app —— 2️⃣ 𝗦𝘁𝗮𝗴𝗲𝗱 𝘄𝗮𝗹𝗹𝗲𝘁𝘀 — also house tokenized payment details but don’t transmit them anywhere. Instead, they perform transactions in two stages At the funding stage, the wallet acquires money from a customer’s bank account, credit line, or other source. Then, at the payment stage, it sends funds to a merchant In this scenario, a wallet provider can make additional fraud assessments. At the same time, a payment network or card issuer may know nothing about details of a particular transaction that are disclosed during operations with pass-through solutions i.e. — PayPal, Google Wallet, Cash App (US & UK). —— 3️⃣ 𝗦𝘁𝗼𝗿𝗲𝗱 𝗱𝗶𝗴𝗶𝘁𝗮𝗹 𝘄𝗮𝗹𝗹𝗲𝘁𝘀 — work as prepaid cards. Before making a transaction, a user must load money to a wallet’s balance from a bank account, debit or credit card, via P2P transfer, etc. The availability of funding sources differs across providers, depending on the location and targeted users. A merchant withdraws money directly from the wallet Stored wallets are especially popular in unbanked & underbanked countries since they enable people to deposit money without having a bank account i.e. — Apple Cash (US only), Alipay, WeChat Pay, Paytm Wallet (India’s largest platform for instant payments) & work of art merchant wise — Starbucks ☕️ —— Source: AltexSoft & https://lnkd.in/g8TtvEAr ► Sign up to 𝐓𝐡𝐞 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 𝐁𝐫𝐞𝐰𝐬 : https://lnkd.in/g5cDhnjC ► Marcel van Oost and Connecting the dots in payments...

Digital wallets: Creating the next generation of super apps There are three types of digital wallet technology, open loop, closed loop, and semi-closed loop. With closed-loop systems, digital wallet users can top up a specific spending account which is linked to a payment source, such as a credit card account. These sources are therefore linked to a specific merchant, meaning they are often used for in-store purchases. They can be used for online payments, however this is less common, as general multi-merchant payment systems are more common for online transactions. Due to this restriction to a single merchant, closed-loop digital wallets are primarily used for specific merchant offers, such as loyalty schemes, and discounts. Semi-closed loop digital wallets allow users to shop using digital wallets and transfer virtual funds to another user who has an account in the wallet network. Merchants need to enter into an agreement with the wallet issuer to accept payments, with interoperability permitted only for full-KYC (Know Your Customer) semi-closed wallets. This type of wallet is not widespread, due to the need for both the sender and the receiver of a payment needing to have the wallet to enable a transaction. This limits the number of potential transfers a user can make. Another issue that presents is the fact that until wallets become widespread, they have limited useability. However, they are unlikely to become widespread until they offer the ability to facilitate more of the potential users’ transactions. As a result, there are very few major semi-closed digital wallets, with primary examples being Paytm and Mobikwik in India. Open-loop digital wallets are where stored cards and funds can be used on any site or merchant accepting the wallet or tapping a mobile phone at an NFC-enabled payment terminal. The impact of this technology can be seen in the fact that many of the largest digital wallets have emerged from eCommerce platforms that had to facilitate payments to multiple merchants, such as PayPal or Alipay. There are reasons that can lead to the popularity of a digital wallet not necessarily leading to merchant acceptance. One is the issue of data ownership, with the ownership being transferred to wallet providers from merchants. This reduces the merchant’s ability to utilise this data to improve its own business. Another potential issue is the charging of transaction fees by the wallet provider. This would be of particular concern for small businesses where higher profit margins must be maintained to ensure the financial viability of the business. There can also be information gaps in the evaluation of potential advantages and costs of accepting digital wallets. It is also worth noting that these advantages and costs will vary regionally, based on consumer expectations, available infrastructure, and regulatory framework. Source Juniper Research #fintech #superapps #digitalwallets

Segmenting the World of Wallets💡 The term digital wallet is applied to a bewildering array of different solutions – from single-function wallets that do nothing more than enable a particular type of payment, to true super apps which bring together a wide range of capabilities and services, like taxi hailing, food delivery, cinema tickets, and even wealth management within one easy customer interface. So, to begin with, it’s worth segmenting the main wallet categories – or archetypes – and the business models that underpin them. The one thing that all wallets have in common is payments. Indeed, a typical definition of a digital wallet is “a storage place of secure information necessary to authenticate a customer and initiate an authorization process to make a transaction to purchase goods and services” There are two main funding mechanisms: 💳 Bank or card-connected wallets  This category includes simple pass-through wallets and more complex staged wallets, which store payment information relating to the customer’s connected payment card or bank account. When a transaction is initiated, funds are moved from the customer’s card or account to the seller. Because these wallets do not store any monetary value and instead act as a conduit to a customer’s pre-existing account details and/or payment credentials, they tend not to be heavily regulated. Providers only need to be licensed as a Money Transmitter, Payment Service Provider (PSP), Payment Institution, etc. 📱 Stored value wallets  This category operates in a similar way to a prepaid payment card, by assigning and maintaining a separate customer account. The customer needs to pre-load the funds in some way before they can transact. These wallets are widely chosen by customers who value a high-quality UI/UX with adjacent value-adding features. Because they store for bona fide funds, these wallets tend to be more heavily regulated. Providers are licensed as an Electronic Money Institution (EMI), Digital Bank, etc. The plethora of wallets operating globally can be categorized into 4 main types of consumer value proposition (CVP): 🔹 Financial inclusion Serve un/under-banked segments, acting as substitutes for bank accounts and enabling basic use cases. Examples include: easypaisa and Tala 🔹 Payment convenience Conveniently replicate a physical wallet, acting as an instrument to drive engagement and loyalty. Examples include: Apple Pay and PayPal 🔹 Digital enablement Serve un/under-banked segments, providing a fuller suite of quasi banking services. Examples include: M-PESA Africa and Paytm 🔹 Lifestyle enablement Act as a lifestyle enabler, with frictionless payment services integrated within key ecosytems (e.g. e-commerce, travel etc.). Examples include: WeChat and Alipay Source: Visa - https://bit.ly/3whgcWo #Innovation #Fintech #Banking #OpenBanking #SuperApps #FinancialServices #Cards #Payments #MobilePayments #DigitalPayments #Wallets #UX #CX